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Round the bend

In 2003 China’s TCL agreed to set up a joint venture with French firm Thomson to create the world’s largest TV producer. In the same year, another Chinese firm called Irico (known locally as Rainbow Group) paid Rmb600 million ($89.28 million) for a Hitachi factory that made supersized TVs.

Both companies, and many of their local competitors, were doubling down on CRT (cathode ray tube) technology. But unfortunately the industry was already turning to LCD (liquid-crystal display), which would transform TV sets and computers from clumpy boxes into flatter, sleeker screens.

Betting on CRT was a mistake, and eight of the biggest manufacturers relying on the technology went bust between 2007 to 2012.

One state-backed firm that avoided the same error was BOE Technology. The Beijing-based company began investing in LCD technology in 2003 and last year it overtook South Korea’s LG to become the world’s biggest supplier of LCD TVs and panels, according to market research firm Sigmaintell.

More recently, BOE has become something of a favourite in the A-share market.

It was Huawei that grabbed the limelight when it unveiled its Mate X smartphone at the Mobile World Congress (see WiC442) in Barcelona, but back at home BOE has been sharing the plaudits, because it supplies the bendable screen for Huawei’s new 5G flagship.

OLED, or organic light-emitting diodes, is the display technology that makes foldable screens possible. According to ThePaper.cn, only a few companies in the world, including BOE and Samsung, have been able to put OLED screens into commercial production. Samsung has also launched a foldable 5G handset but Huawei’s Mate X’s has captured more of the headlines, triggering a wave of investor interest in its parts suppliers such as BOE. Over the past month, the Shenzhen-listed firm has seen its market value climb more than 50% to a peak of Rmb145 billion ($21 billion) on March 5.

However, the surging price has some observers questioning whether BOE has a genuine long-term advantage in mastering OLED technology, or whether the stock spike is more the result of the typical market speculation so beloved of A-share punters.

In fact, BOE isn’t the only foldable screen firm in the country. Visionox Technology and Tianma Microelectronics have both been linked to OLED supply contracts with domestic smartphone makers and both firms’ shares have been on a tear on the Shenzhen bourse too.

According to National Business Daily, foreign producers such as DOW Chemical and LG Chem have also secured a commanding position upstream in the OLED supply chain. The newspaper notes that the likes of BOE are still relying on imports of advanced materials to produce their displays. And in a situation similar to parts of the semiconductor industry, some of the most advanced kit for production, such as the hardware for OLED vacuum evaporation, is controlled by foreign players, including Japan’s Canon Tokki.

21CN Business Herald also noticed that BOE warned recently that its 2018 net profits would drop by more than half. “Its share price spike is more likely a result of market speculation,” it concludes.

Other tech commentators have even questioned if bendable screens are going to be as game-changing as the touch screens that drove iPhone sales. Huawei’s Mate X and similar models are more likely to take market share from bigger-screen tablets such as the iPad, Wallstreet.cn thought. But this segment may not be big enough to cement the foldable handset’s place as the future of 5G telecommunications.

“Could the Mate X end up being Motorola’s RAZR?” the website wondered, referencing the flip phone launched in 2004. The RAZR’s fortunes were fleeting and it was surpassed by the debut of the iPhone, which went on to conquer the smartphone world.

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